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Chemung Financial Reports Record Earnings

Non-interest expense for the fourth quarter of 2012 was $12.6 million compared with $11.5 million for the same quarter in the prior year, an increase of $1.1 million, or 9.7%. The increase was primarily due to increases of $0.6 million in salaries and wages and $0.5 million in professional services. The increase in salaries and wages was primarily due to an increase in employees and additional compensation related to merit increases and incentive compensation. The increase in professional services was due to the reason discussed above. Compared with the preceding quarter ended September 30, 2012, non-interest expense increased $1.2 million, or 10.9%. The increase was primarily due to increases of $0.5 million in salaries and wages and $0.6 million in professional services.

Asset Quality:

Non-performing loans totaled $10.5 million at December 31, 2012, or 1.18% of total loans, down $10.4 million from $20.9 million, or 2.62%, at December 31, 2011. Non-performing assets which are comprised of non-performing loans and other real estate owned, totaled $11.1 million at December 31, 2012, or 0.89% of total assets, down $10.7 million from $21.8 million, or 1.79%, at December 31, 2011. Excluding $4.5 million in accruing loans that are 90 days or more past their stated maturity dates, the non-performing assets to total assets ratio was 0.53%.

Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth. Based on this analysis, the provision for loan losses for the twelve months ended December 31, 2012, was $0.8 million, a decrease of $0.1 million compared with the prior year. Net charge-offs for the twelve months ended December 31, 2012, were $0.2 million compared with $0.8 million for the prior year.

For the fourth quarter of 2012, the provision for loan losses was $0.1 million compared with $0.2 million for the preceding quarter and $0.1 million for the same quarter in the prior year. Net charge-offs for the current quarter were $0.5 million compared with net recoveries of $0.2 million for the preceding quarter and net charge-offs of $0.1 million for the same quarter in the prior year.